Standard Chartered IDR IPO Review: Beware of the Risks & Taxes

Standard Chartered PLC or StanChart is coming out with its first ever unique offering in the Indian Market - its called the IDR or Indian Depository Receipts. In this article, we cover the details of Standard Chartered IDR issue, the review of Standard Chartered IDR, rewards, risks and tax implications of Standard Chartered IDR

Standard Chartered Indian Depository Receipts IDR Details

First of all, what is an IDR and how is it different from a normal stock like State Bank of India or Reliance?
The concept of Standard Chartered IDR is unique because this is the first time it is coming to the Indian Markets. We all are aware about the Indian companies floating GDR and ADR in foreign markets like USA and other countries. The same concept applies here - Standard Chartered being a foreign bank wants to trade in local Indian Markets, hence it is going for IDR or Indian Depository Reeceipts

The Standard Chartered IDR issue will be around 500 million USD and there will be around 22 Crore IDR shares or better to say 22 Crore IDR's floated in the Indian market for trading on Indian Bourses. For a common investor, it will be same like a share like that of any other company like Infosys, Reliance, etc.

The listing of Standard Chartered IDR is expected to be complete by June 2010. The company is banking on the healthy financial nos. that the Indian Unit has posted recently and also trying to capitalize on the brand value that Standard Chartered is a well known brand in India for last so many years.

As per the IDR regulations, the proceeds from this Standard Chartered IDR issue will be reptriated to United Kingdom, the country where Standard Chartered is headquartered.

So, this Standard Chartered IDR looks to be a good option for investors looking for foreign exposure?
Yes. It might be so. But one also needs to be aware of the risks.
Forex risk may creap in anytime, and we have seen a lot of volatility in the forex rates in last 2 years.
Also note that investors may take the hit on the tax front.

What are the tax implications of Standard Chartered IDR Indian Depository Receipts?

This is where the IDR differs from a common Indian Stock. The other Indian Stocks have two categories - Short Term Capital gains tax at 15% and Long Term Capital Gains tax at 0%.
However, IDR may not get this lower tax benefit. It might be taxed at 20% for long term capital gains tax and 30% on Short Term Capital Gains Tax.

Moreover, the dividend, if declared by any IDR issue, will also be taxed for dividend distribution tax.
Hence, all these factors related to big tax rates may force traders and market makers to stay away from opting for IDR issues and even trading in these IDR securities. That might hit the trading volume of IDR, as compared to other common stocks. The same may be felt by the other investors. So the investors need to be careful about these Risks associated with IDR.

TamilNadu TN DA Dearness Allowance 8% Hike Sixth Pay Commission: Pension, Pay Arrears & Salary Hike

The latest news on Sixth Pay Commission is for the state of Tamilnadu, TN. The TN State Government employees will now get an effective increase of eight percent or 8% in the Dearness Allowance (DA). This hike of 8% will be applicable for all Tamilnadu state government employees including teachers as well as pensioners. These employees, government employees who are expecting to get the benefits of the Sixth pay Commission Panel Recommendations

From which date is the TN Dearness Allowance hike effective following Sixth Pay Commission Recommendations?
The effective date for TN Dearness Allowance hike is 1st January, 2010.

Why is this hike in dearness allowance giiven for TN state government employees?
The reason being quoted is to bring the Allowance at par with the central government employees. Although it will cost around 1448 crore Rupees worth of additional financial burden.

General Sixth Pay Commission Salary Hike & Arrears Calculator

Salary Calculator for Pension calculations for Sixth Pay Commission Salary Hike

It was in May 2009, when the Tamilnadu government implemented the Sixth pay Commission and increased the salaries in the range of Rs 1,775 and Rs 7,300 per month.

How many employees are expected to benefit from this recommendation?
There are about 12 lakh employees in Tamilnadu in the state government services including teachers. Then there are also around 5 lakh pensioners in the Tamilnadu state.
It is reported that this decision has been welcomed by all the state employees as well as pensioners. The people have thanked the CM for this generous decision increasing their salaries as per sixth pay commission.

Punjab Sixth Pay Commission: Pay Arrears & Salary Hike Details

The latest news on Sixth Pay Commission is for the state of Punjab. Unfortunately, the news is not that good for the Punjab state goverment employees, especially those who are waiting for payment arrears. These employees, government employees who are expecting to get the benefits of the Sixth pay Commission Panel Recommendations as per the new calculations, will have to wait a bit longer for the payment arrears to be made.

What is the exact problem behind the delay in payment of arrears following Sixth Pay Commission Recommendations?
The main reason can be the huge amount of money of Rs. 3000 Crore that is to be paid out in the form of arrears. As per the news reports, It appears that the Punjab Government is not having the money so that might be a reason for delay in payment of arrears.

Are there any category of officers who have been paid the arrears?
Yes. It is reported that IAS and IPS officers have been paid the Sixth Pay Commission arrears, but that money was not from the state government funds, it was from the central funds.

General Sixth Pay Commission Salary Hike & Arrears Calculator

Salary Calculator for Pension calculations for Sixth Pay Commission Salary Hike

WHat are the reasons quoted by the government?
As per the news, the Finance Minister, Manpreet Badal, is saying that the Punjab government budget will focus on irrigation, power, urban development, education and nutrition. He is reported to remain silent on questions raised by Sunil Jakhar. There are allegations that the government is not generating any jobs, and is mentioning that FM is remaining silent on the issue of when the money of arrears payments will be released. The toughest question the government faces is where to get the money of Rs. 3000 Crore for arrears payments

Ex-servicemen Armed forces Sixth Pay Commission: Pay Arrears & Salary Hike Details after SC ruling

The latest news on Sixth Pay Commission is for the Ex-servicemen or Armed forces officers, who either retired or were supposed to retire between 1986 and 1996. There was a court case going on in the Keral High Court and today the honourable Supreme Court has upheld the decision of the Keral High Court that the pay arrears, pension details for Ex-servicemen or Armed forces officers were calculated incorrectly and they should be re-recalculated and paid with retrospective effect from Jan 1, 1986. This will bring in a big payment of arrears and pension payment for the retired army officers or Ex-servicemen or Armed forces officers. These employees, government employees will be getting the benefits of the Sixth pay Commission Panel Recommendations as per the new calculations.

How many ex-servicemen or army officers will benefit from this latest development on Sixth Pay Commission Recommendations?
Around 30,000 to 40,000 ex-servicemen or retired armed forces officers who were commissioned or retired between 1986 and 1996, are expected to benefit.

General Sixth Pay Commission Salary Hike & Arrears Calculator

Salary Calculator for Pension calculations for Sixth Pay Commission Salary Hike

Since which date will the Sixth Pay Commission Recommendations be effective?
As per the orders of the court, the calculations and hence the payment of arrears and pension should be made effective Jan 1, 1986.
Not only that, the employees will also be eligible to receive a 6% interest per annum for this.

Any officers who are exempted from this decision?
Yes - The order will not be applicable to officers who were commissioned or retired post-1996
The reason for this is that they were covered under the Fifth and Sixth Pay Commissions

Will the widows be eligible for this benefit?
Yes - not just the serving as well as retired army officers, also the widows will be eligible for this.

How many employees are expected to benefit from this recommendation?
Around 30K to 40K servicemen are expected to benefit.

Classic Risk Exposure: Risk Management & Assessment

This article contains details and info about Classic Risk Exposure, Risk Analysis, Operational Risk and Risk Managment and Assessment.
We list below the various topics and sub-topics which a Risk Professional should be aware of. Given the recent problems in the various financial markets across the globe, the word Risk has become a primary item of ivestigation. How and from what all sources risk can come in, what all problems can lead to risk and how Effective Risk Management techniques and Risk Assessment methods be used to mitigate risk - are some of the topics that are a must to be covered in any Risk related course.

 --Default/ Failed Counterparty Risk:: This is a typical case when an outstanding Payment which is Due from a particular entity or party is not Made at all or not made on time.

 --Market Risk :- The typical case with a particular market fall - like Collapse of Greece Financial system

 --Liquidity Risk :- The case of not being able to change or sell your assets easily and get cash for it

 --Sovereign Risk/Force Majeure :- Related to Market risk, as well as poilitcal or regional risk.

 --Reputation Risk :- The problems with a reputation of a company can bring it down. For e.g. Cadbury sales were hit drastically in South Asia when an insect was found in one of its chocolate. Same happened with Pepsi when there were news that the pesticide content is huge in its drinks.

 --Violating the 5 C's of Credit Extension Risk: The C's - what they are and how they are impacted.

 --Moral Hazard Risk :- Power to someone not eligible to take decision, putting entire work, reputation at stake

 --Over leverage Risk : - Leverage is tied to the assets being financed

 --OPM- Other People's Money:/ The typical case of Mutual Funds and Portfolio Services. I manage your money. If we make money, I keep the lion's share, I we loose money, you are the looser.

 --FX Risk : Multinational Corps facing the risk of forec transactions. A good article on Forex Risk and Hedging

 --Risk due to Failure of Governance : Typical case of Greece Economy failure and also Iceland

 --Political Risk : No clear mandate for government, causes a lot of financial instability

 --Misused Moral Suasion Risk :

Home Buyers: Mobile Search Real Estate Property through Mobile Cellphone Applications

It is time to go hi tech, and the various real estate firms as well as rela estate brokers know it well. With more and more home buyers using technology to know about the various homes available for sale or purchase, the market participants of the real estate markets are providing them the details at their finger tips. Yes, that's right, the real estate is appearing to be back in demand, home buyers are looking for new properties and they are being served with all the information right on their mobile phones with various real estate players and brokers offering Mobile apps or cellphone applications for searching homes using GPS technologies.
Most of them are offering a free download to the prospective buyers mobile phone. With hi-end smartphones like the apple iphone becoming hugely popular, the opportunity is well utilized by the real estate market players. And its a win-win situation for both the buyer-sellers as well as the real estate broker agents.

How does the Mobile App for home search work?
Let's say you are visiting a friend in a New York suburb for the first time and you find that locality very good or you are visiting a riverside for a picnic and like that area. You may like to know whether there are any real estate properties available for sale in that area.
If you go by the traditional way, you will have to look at a particular real estate website, then search for that area or zip code and then search for the available properties. Its a cumbersome process as you dont carry the laptop always, and you dont know what all areas are worth looking at.

Enter the Mobile apps for home buyer search which will provide all the info you need right onto your mobile phone. So you are at your friend locality which looks good to you, you want to know whether any properties are available for purchase and all you need to do is take out your cell phone, load the freely available app for home buyer search and the GPS system will automatically track your location and offer you all the details about available properties in that area. Simple and straight.

ANy examples of Mobile App for home search ?
Yes, there are multiple real estate brokers, agent as well as real estate players offering FREE mobile applications ready to be downloaded to your smartphones or cell phones. Here is a list of few of them:

Realtor.com iPhone Real Estate App

Smarter Agent LLC app for searching real estate listing from Cell Phones

ColdwellBanker.com Mobile Apps for iPhone, Android & other mobiles

What are the benefits of Mobile App for home search ?
First, you dont have to always carry a laptop and access a website.
Second, all the info you need is available to you on your mobile which is quite handy
Three, you dont have to key in your location always, the GPS system automatically shows you the nearest available propeties
Four, you get all the info on the move at your fingetips, so you dont have to personally travel or visit to the property site saving time, fuel and energy
Five, the feature rich mobile apps for home buyer search provide you with all the info, pictures, streaming videos, price quotes, auction details, date and time for sale and so on, so you are informed well in time

UP Uttar Pradesh PSU get Sixth Pay Commission: Arrears & Salary Hike Details

The latest news on Sixth Pay Commission is for the state of UP Or Uttar Pradesh, where the Public Sector Undertakings or PSU state employees are going to benefit from the recommendations of the Sixth Pay Commission. The recommendations of the 6th Pay commission are accepted for Public Sector Undertakings or PSU of the UP state. These state employees, basicallay government employees will be getting the benefits of the Sixth pay Commission Panel Recommendations.

Which UP PSU or Uttar Pradesh Public Sector Undertakings will benefit from Sixth Pay Commission Recommendations?
The employees of the following Uttar Pradesh Public Sector Undertakings will get the benefit of 6th Pay Commission:

UP Project Corporation
UP Seed Development Corporation
UP Social Welfare Corporation
UP State Bridge Corporation
UP Development Systems Corporation
UP State Industrial Development Corporation
UP Jal Nigam
Pradesh Industrial and Investment Corporation


All these PSU's are profit making PSU's of UP state.
In addition to this, the Gorakhpur Industrial Development Authority employees will also benefit, as per the reports.

General Sixth Pay Commission Salary Hike & Arrears Calculator

Salary Calculator for Pension calculations for Sixth Pay Commission Salary Hike

When was this decision taken?
This decision was taken on March 6th in a meeting presided by Chief Minister Mayawati in Lucknow
However, the state government will not bear the burden of this pay hike or salary hike, that means the hike will either from the center or from the profits of these PSU's.

Since which date will the Sixth Pay Commission Recommendations be effective?
No reports about the effective dates, further details awaited.
Employees of these 8 PSU's of UP and Gorakhpur IDA can celebrate.

ICICI, HDFC, Kotak, Axis Bank Hike Loan Rate: Increase rates on Home & Car Loans

There comes the big news which everyone was afraid of - The largest players in the home loan and car loan markets have gone for a Home Loan Rate Hike and Car Loan Rate Hike. This comes as another big hit for the retail customers who are looking for a respite from the rising inflation costs, high cost of living in metro and other issues. The budget has already put a load on the consumers in terms for fuel price hike, then there is a proposal to charge 10.3% service tax if someone is booking a uner constructed flat or apartment. Now, the rate hike by the leading banks, who are big players in the home loan and car loan markets have added more problems for the end customers.

Axis bank was the first one in the list, which stopped its attractive discount home loan offer of 8.25% fixed for 2 years, even before the budget. Now, ICICI Bank and HDFC Bank have also joined the babndwagon by increasing the home loan rates and car loan rates.
The reason being quoted is the stand by RBI - it increased the cash reserve ratio by 75 basis points which led to this change. This also had the effect on bond market, the 10 year benchmark bond has risen around 12 bp since budget was announced.

By what rates have auto loans or car loans increased?
The auto loans or car loans have been increased between 0.5% to 1% and it varies from Bank to Bank.

By what rates have House loans or Home loans increased?
The home loans have gone by by 50 basis points.

The banks are quoting the reason that they have offered high rates on the deposits schemes by as much as 75 basis points and they are trying to justify it by saying that loan rates should get correlated with the high deposit rates.

Which Banks have increased the loan rates?
Multiple Banks - ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank,

ANy other banks which are still offering cheaper home loan rates?
Yes - the budget was good for the nationalized banks - so again Banks like SBI, PNB, Bank of Maharashtra are offering the discounted rates. However, the problem is that these banks take atleast 45 days to process the applications, leaving less choice for the customers as bookings of the flat should be made in a hurry, and that is where the customer is forced to approach the private banks.
Union bank & Cancara Bank have wqithdrawn their discounted home loan schemes.

Fixed Income Securities Market & Credit Risk Valuations

In our previous article, we had mentioned about Fixed Income Securities Market: Introduction, Example, Market & Other Factors. In this article, we will discuss about Fixed Income Mathematics, Valuations topics of Bonds or Fixed Income Securities, Calculations for Fixed Income Securities and how the market for Fixed Income Securities works?, but the focus will be more of credit market-related topics.
Let's start with the fundamentals:

Issuance Or Origination (Creation) Of Debt Securities Fixed Income Securities: the process of issuance of Fixed Income Securities, underwriters distributors and all the parties involved.

 --Underwriting/Distribution of New Issue

 --Pricing (Setting the Offering Yields) of New Issues

Market Pricing Of Credit The Treasury Yield Curve And Credit Or Sector Spreads Fixed Income Securities:

 --Yield Curves and how they are used to price Fixed Income Securities

 --Yield Curves Theory and usages in Fixed Income Securities

 --The Fed (Federal Reserve System) and Interest Rates and how the risk free rate affects the pricing and trading of Fixed Income Securities

Credit Risk: Measurement, Mitigation And Investment Considerations Fixed Income Securities:

 --Measuring or Quantifying Credit (Default) Risk

 --Use and significance of Credit Ratings

 --How to Mitigate or Minimize the Credit Risk

 --Penny Stocks vis a vis Junk bonds - Features of so called High Yield Securities

Bond Prices And Yields Fixed Income Securities:

 --Bond Quotations and how to read and understand them

 --Bond Prices

Quantifying And Managing Interest Rate (Price) Risk Fixed Income Securities:

 --Yield to Maturity (YTM): Factors Determining Sensitivity of Price to Change in YTM

 --Quantifying Price Sensitivity to Changes In Market Yields

 --Callable Bonds

 --Applications of duration

Debt Retirement Bond Redemptions Fixed Income Securities:

 --Scheduled repayment of principal

 --Early Retirement Of Principal

 --Other Debt Retirement-Related Issues